In Picture: Dr Vikram Shah, CMD of Shalby Hospitals
In Picture: Dr Vikram Shah, CMD of Shalby Hospitals

Ahmedabad-headquartered Shalby Hospitals is a multi-speciality hospital chain operating across the country. This chain is in its 25th year of existence and has managed to have an aggregate of over 2, 000 beds and a wide product offering. It is among the listed options for investors to look at, in the context of the opportunity and the footprint expansion. Dr Vikram Shah, CMD of Shalby Hospitals, chats with Pankaj Joshi about his vision for Shalby Hospitals.

Edited excerpts:

How much has the activity mix evolved and how do you view your efficient quotient of average length of stay for patient?
If you look at the activity profile, it is typical that high-end hospitals with proper facilities are focusing more on transplant and similar kind of more demanding procedures. These procedures are possible due to the investment put in to build capacity. This has been the main evolution in our work profile over the last two to three years.

Shalby has traditionally prided itself on the parameter of patients’ turnaround time. It has been improving steadily over the years. We are focusing on key areas like motivating our staff as well as the patients. Today we are in the happy position that patients understand the value of early discharge, and doctors appreciate that it is better if the cure process can be made quicker.

There was a time when a joint replacement procedure would take 10 days, from admission up to discharge of the patient. Similarly for a heart procedure like a bypass, it would take 12 days. As of today, we are doing a patient turnaround in three-four days for joint replacement and five-six days for a bypass procedure. Our target for the future is to bring this down to two days for joint replacement and three-four days for bypass procedures. The outcome of this is that the patient and relatives are so happy and they provide positive feedback, which every hospital would aspire for.

Shalby Hospitals CMD Dr Vikram Shah: Healthcare is largely unorganised sector on the road to getting more organised

What is the extent of health insurance penetration in the sector and how much of a catalyst is it?
Health insurance has made a difference in the non-emergency surgery processes. Take the case of knee replacement which is generally taken as optional and very rarely does it come under the category of critical, time-bound or emergency procedure cases for the patient. What happens is that patient reluctance, for such procedures, is much less whenever he has insurance coverage. Therefore it is definitely an advantage which we obtain through the presence and penetration of health insurance.
From a national perspective, it is western India that has seen the greatest penetration of health insurance. Within that, Mumbai and Ahmedabad are the best penetrated markets. Even today there is still much scope left but we estimate that over the next seven-eight years western India should have a 50 per cent coverage level in health insurance.

What is the exact geographical strategy behind your expansions?
Currently, we are based out of Ahmedabad with four locations and then two more in South Gujarat towards Mumbai. For us, Mumbai is an important market because we have a lot of patients coming in from Mumbai and the surrounding areas. We are already having a presence in Mumbai at two locations—one is at Ghatkopar and the other is Santacruz where we have taken over a well-established hospital.

Beyond that, we are present at two locations in North India and two more in Madhya Pradesh itself, where we see an important market. Our geographical expansion strategy is very simple. Any areas from where we attract patients to our existing facilities, wherever we can see the strength of our brand, there we can plan a physical facility location. We would look at Delhi, Kolkata, Bhubaneswar, Raipur and Ranchi as options for our expansion programme. We are not looking at the South, simply because we believe it is very well served in terms of healthcare delivery facilities. We see larger opportunities in under-served areas. As far as capex funding is concerned, we have been consistently generating surpluses from business operations. Also, we are a listed company and today our non-promoter equity stake dilution is less than 20 per cent, which we need to get to 25 per cent in a year or two. This also is a fund source which we can monetise. Debt funding is another option, presently, we are zero debt.

How does the healthcare delivery look at its specific drivers?
In the healthcare delivery sector where we operate, the biggest opportunity is that it is largely unorganised and now it is on the road to getting more organised. Likewise, the other triggers are evident—people are getting more aware, more proactive and the rising incidence of health insurance cover is another catalyst. If you look at trends on the supply side, the small facilities are getting into closure mode or getting acquired.

At the sector level, I sincerely believe that we are at the cusp of a solid growth path for next 20-25 years, much like banking was in the mid nineties. Players like HDFC Bank rode the growth wave there and we believe there are similar opportunities in healthcare delivery as well. If you want to map the opportunity in terms of coverage, today the spread is up to metro and tier-I cities. The next phase of growth will come from tier-II and tier-III cities. Geographical expansion will drive the sector.

Shalby Hospitals CMD Dr Vikram Shah: Healthcare is largely unorganised sector on the road to getting more organised

What kind of regulatory mindset would help the sector thrive?
The specific wish list is to address a dichotomy. There is a requirement to safeguard the common man and the same reflects in the regulations. However, the domestic industry at times does come across as over regulated. It may be more sensible to benchmark regulations here to other service sectors. Another aspect that regulators must consider is that this sector is a large employment generator, and more so for the female segment of the population. All this should merit weightage when sector policy is framed.

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